Eurozone private sector and manufacturing growth unexpectedly jumped to the highest in six years in February and job creation reached its fastest since August 2007, propelled by strong demand and optimism about the future, the latest Markit PMI survey found. The Markit Eurozone PMI registered 56.0 in February, up from 54.4 in January , the highest reading since April 2011.

"The pace of eurozone economic growth improved markedly to hit a near six-year high in February, according to PMI survey data. Job creation was the best seen for nine and a half years, order book growth picked up and business optimism moved higher, all boding well for the recovery to maintain strong momentum in coming months."

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The broad-based acceleration, which showed France's momentum getting close to Germany's, suggests that if sustained, economic growth could hit 0.6 percent in the first quarter, according to Markit. That is faster than the 0.4 percent economists predicted in a Reuters poll earlier this month and suggests an economy in rude health before key national elections this year in France, Germany and the Netherlands.

The euro zone flash manufacturing PMI rose to 55.5 from January's 55.2, the highest since April 2011. New export orders also rose to a near six-year high of 55.5 from January's 55.2, suggesting a weaker currency is helping boost demand. The services PMI was also buoyant, with the business activity index rising to 55.6 from 53.7, easily beating the Reuters poll expectation of no change at 53.7 and the most optimistic forecast in the survey. The services sub-index measuring incoming new business, at 55.8, was also the highest in nearly six years.

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According to the survey, growth accelerated in both manufacturing and services to rates not seen since early-2011, with the goods-producing sector again enjoying the faster rate of expansion. February also saw the largest overall increase in new business since April 2011. Inflows of new work grew at the strongest rates for almost six years in both manufacturing and services, reflecting a broad-based upturn in demand. Manufacturers’ order books again received an extra boost from rising exports1, which also swelled to the greatest extent since April 2011 due to the combination of rising demand and the weaker euro.

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However, adding to ECB concerns that tapering of QE may be inevitable, "Inflationary pressures meanwhile continued to intensify." An indicator of inflationary pressures, Input Prices rose for the 6th straight month to the highest since May 2011 while output price inflation rose to a 68-month high, putting the ECB squarely in the spotlight. 

"The increased momentum is due to demand growing at a stronger rate, but also that upturn becoming more broad-based," said Chris Williamson, chief business economist at IHS Markit. "Importantly, what we now have is France joining the party. It's been a laggard in the region, and a drag on the euro zone upturn for a few years ... and there are finally signs the drag is easing."

Finally, here is the summary from Goldman's Timothy Munday:

BOTTOM LINE: The Euro area flash PMI reached a 70-month high, rising from 54.4 to 56.0, against consensus expectations and our own forecast of 54.3. The increase was predominantly caused by a robust increase in the services PMI. There were gains in both the German and French PMIs. RETINA's median estimate of Q1 Euro area GDP growth rose 0.1pp based on today's data (to +0.8%qoq).

1. The Euro area PMI breakdown revealed rises in both the services PMI (from 53.7 to 55.6) and the manufacturing PMI (from 55.2 to 55.5).

2. The manufacturing breakdown showed increases in output (+1.1pt) and new orders (+0.1pt), but a decline in employment (-0.3pt). Within the services PMI, the signals from the forward-looking components (which are not part of the headline services PMI figure) were robust, with 'incoming new business' increasing by +2.1pt, and 'business expectations' rising by 3.5pt.

3. On an individual country basis, the German composite PMI rose from 54.8 to 56.1, while the French composite PMI rose from 54.1 to 56.2. There are no published flash estimates for Italy or Spain.